Bill Moyers interviews US Army Colonel Andrew J. Bacevich, who identifies three major problems facing our democracy: the crises of economy, government and militarism, and calls for a redefinition of the American way of life. Excerpts below.

ANDREW BACEVICH: I didn’t create that phrase. It’s a phrase drawn from a book by a wonderful historian at Harvard University, Charles Maier, and the point he makes in his very important book is that, if we think of the United States at the apex of American power, which I would say would be the immediate post World War Two period, through the Eisenhower years, into the Kennedy years. We made what the world wanted. They wanted our cars. We exported our television sets, our refrigerators – we were the world’s manufacturing base. He called it an "empire of production."

BILL MOYERS: Right.

ANDREW BACEVICH: Sometime around the 1960s there was a tipping point, when the "empire of production" began to become the "empire of consumption." When the cars started to be produced elsewhere, and the television sets, and the socks, and everything else. And what we ended up with was the American people becoming consumers rather than producers.

BILL MOYERS: And you say this has produced a condition of profound dependency, to the extent, and I’m quoting you, "Americans are no longer masters of their own fate."

ANDREW BACEVICH: Well, they’re not. I mean, the current debt to the Chinese government grows day by day. Why? Well, because of the negative trade balance. Our negative trade balance with the world is something in the order of $800 billion per year. That’s $800 billion of stuff that we buy, so that we can consume, that is $800 billion greater than the amount of stuff that we sell to them. That’s a big number. I mean, it’s a big number even relative to the size of our economy.

BILL MOYERS: And you use this metaphor that is intriguing. American policy makers, quote, "have been engaged in a de facto Ponzi scheme, intended to extend indefinitely, the American line of credit." What’s going on that resembles a Ponzi scheme?

ANDREW BACEVICH: This continuing tendency to borrow and to assume that the bills are never going to come due. I testified before a House committee six weeks ago now, on the future of U.S grand strategy. I was struck by the questions coming from members that showed an awareness, a sensitivity, and a deep concern, about some of the issues that I tried to raise in the book.

"How are we gonna pay the bills? How are we gonna pay for the commitment of entitlements that is going to increase year by year for the next couple of decades, especially as baby boomers retire?" Nobody has answers to those questions. So, I was pleased that these members of Congress understood the problem. I was absolutely taken aback when they said, "Professor, what can we do about this?" And their candid admission that they didn’t have any answers, that they were perplexed, that this problem of learning to live within our means seemed to have no politically plausible solution.

BILL MOYERS: You say in here that the tipping point between wanting more than we were willing to pay for began in the Johnson Administration. "We can fix the tipping point with precision," you write. "It occurred between 1965, when President Lyndon Baines Johnson ordered U.S. combat troops to South Vietnam, and 1973, when President Richard Nixon finally ended direct U.S. involvement in that war." Why do you see that period so crucial?

ANDREW BACEVICH: When President Johnson became President, our trade balance was in the black. By the time we get to the Nixon era, it’s in the red. And it stays in the red down to the present. Matter of fact, the trade imbalance becomes essentially larger year by year.

So, I think that it is the ’60s, generally, the Vietnam period, slightly more specifically, was the moment when we began to lose control of our economic fate. And most disturbingly, we’re still really in denial. We still haven’t recognized that.

BILL MOYERS: Now you go on to say that there was another fateful period between July 1979 and March of 1983. You describe it, in fact, as a pivot of contemporary American history. That includes Jimmy Carter and Ronald Reagan, right?

ANDREW BACEVICH: Well, I would be one of the first to confess that – I think that we have misunderstood and underestimated President Carter. He was the one President of our time who recognized, I think, the challenges awaiting us if we refused to get our house in order.

BILL MOYERS: You’re the only author I have read, since I read Jimmy Carter, who gives so much time to the President’s speech on July 15th, 1979. Why does that speech speak to you so strongly?

ANDREW BACEVICH: Well, this is the so-called Malaise Speech, even though he never used the word "malaise" in the text to the address. It’s a very powerful speech, I think, because President Carter says in that speech, oil, our dependence on oil, poses a looming threat to the country. If we act now, we may be able to fix this problem. If we don’t act now, we’re headed down a path in which not only will we become increasingly dependent upon foreign oil, but we will have opted for a false model of freedom. A freedom of materialism, a freedom of self-indulgence, a freedom of collective recklessness. And what the President was saying at the time was, we need to think about what we mean by freedom. We need to choose a definition of freedom which is anchored in truth, and the way to manifest that choice, is by addressing our energy problem.

He had a profound understanding of the dilemma facing the country in the post Vietnam period. And of course, he was completely hooted, derided, disregarded.

BILL MOYERS: And he lost the election. You in fact say-

ANDREW BACEVICH: Exactly.

BILL MOYERS: -this speech killed any chance he had of winning reelection. Why? Because the American people didn’t want to settle for less?

ANDREW BACEVICH: They absolutely did not. And indeed, the election of 1980 was the great expression of that, because in 1980, we have a candidate, perhaps the most skillful politician of our time, Ronald Reagan, who says that, "Doom-sayers, gloom-sayers, don’t listen to them. The country’s best days are ahead of us."

BILL MOYERS: Morning in America.

ANDREW BACEVICH: It’s Morning in America. And you don’t have to sacrifice, you can have more, all we need to do is get government out of the way, and drill more holes for oil, because the President led us to believe the supply of oil was infinite.

BILL MOYERS: You describe Ronald Reagan as the "modern prophet of profligacy. The politician who gave moral sanction to the empire of consumption."

ANDREW BACEVICH: Well, to understand the truth about President Reagan, is to understand why so much of what we imagined to be our politics is misleading and false. He was the guy who came in and said we need to shrink the size of government. Government didn’t shrink during the Reagan era, it grew.

He came in and he said we need to reduce the level of federal spending. He didn’t reduce it, it went through the roof, and the budget deficits for his time were the greatest they had been since World War Two.

BILL MOYERS: And do you remember that it was his successor, his Vice President, the first President Bush who said in 1992, the American way of life is not negotiable.

ANDREW BACEVICH: And all presidents, again, this is not a Republican thing, or a Democratic thing, all presidents, all administrations are committed to that proposition. Now, I would say, that probably, 90 percent of the American people today would concur. The American way of life is not up for negotiation.

What I would invite them to consider is that, if you want to preserve that which you value most in the American way of life, and of course you need to ask yourself, what is it you value most. That if you want to preserve that which you value most in the American way of life, then we need to change the American way of life. We need to modify that which may be peripheral, in order to preserve that which is at the center of what we value.

Tom Evslin at Fractals of Change offers six steps to victory for Winning the War on Terror. These ideas are probably too reasonable to be supported in Washington, where strategy is too often based on cliches and under-the-table profiteering.

Time’s up.I’m still not at all sorry Saddam was toppled.I still remember that he did not allow the UN inspections required to assure that he did not have WMD.That was his mistake and not ours.But creating a democracy in Iraq is a job for Iraqis.